Sirius XM Canada wants to keep NHL satellite radio rights when they expire

01/15/2014 01:36 EST
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Updated
03/17/2014 05:59 EDT

CP

Sirius XM Canada says there's a big enough appetite for hockey that the NHL should renew its North American deal to broadcast games on satellite radio.

Sirus XM CEO Mark Redmond said Wednesday that the NHL's multibillion-dollar deal with Rogers for TV and multimedia broadcasting rights in Canada shouldn't affect the renewal of the satellite radio deal.

Redmond said the 10-year, US$100-million deal with the NHL for U.S. and Canadian rights comes up for renewal at the end of the 2015 NHL season.

He expects that Sirius XM will start talking to the NHL in the coming months and it "may or not may not have any bearing as it relates to what Rogers does."

However, Rogers spokeswoman Patricia Trott said the recent deal with the NHL means that Rogers will own the terrestrial and satellite radio rights to NHL games beginning next year.

"We haven't worked out the details yet of programming going forward," Trott said in an emailed response to questions about satellite radio rights.

The NHL did not respond directly to the satellite rights question, saying only that Sirius XM has been "a great partner and we look forward to talking about ways to extend the partnership for many years in both the U.S. and Canada."

"We expect to begin those discussions down the road," league spokesman Gary Meagher added in an email.

Redmond said Sirius XM gives the NHL a North American platform with millions of U.S. and Canadian subscribers to its NHL Network Radio.

"If the NHL wants their content up with 27 million subscribers in North American through satellite radio, it has got to come through us," Redmond said in an interview after the company's annual shareholder meeting.

"The last time I looked the NHL certainly wants a North American-wide audience," he added.

The deal was negotiated in 2005 with U.S.-based XM Satellite Radio Holdings, then a rival of Sirius Satellite Radio. However, the two companies later merged in the U.S. and Canada.

Sirius XM's NHL Network Radio does "all talk" and broadcasts NHL games. Sirius XM also puts National Hockey League games on its other satellite radio channels.

"So on any given night, we could be playing anywhere from probably 90 per cent of the games to 100 per cent of the games on a North American-wide platform," Redmond said.

Rogers scored the Canadian NHL rights late last fall in a $5.2-billion, 12-year deal that begins next season. It includes the playoffs, the Stanley Cup final and gives Rogers the Canadian rights on multiple platforms, a moved that dealt a serious blow to competitor Bell and its TSN sports channel.

Sports marketing expert Vijay Setlur said the NHL wants to make sure its games are available on all media platforms, when and how fans want them, and make money from doing so.

"Satellite radio is just another platform along with mobile, digital, game console and the traditional forms of media," said Setlur, who teaches sports marketing at York University's Schulich School of Business.

Renewing such a deal shouldn't be negative for Rogers, he said.

"It's another option, but it's not one that's going to cannibalize what Rogers is offering. It's not as though subscription satellite radio will necessarily take away consumption of the channels that Rogers does control."

Meanwhile, Sirius XM Canada (TSX:XSR) is looking for more growth this year from the sale of new vehicles that have the satellite radio service installed and in the used car market, Redmond said.

About 58 per cent of new vehicles come equipped with Sirius XM satellite radio and Redmond said it will likely increase to more than 60 per cent in 2014.

New vehicles that come equipped with satellite radio usually have a trial period and when it expires vehicle owners decide whether they want to pay $15.99 a month to keep the service.

Sirius XM Canada broadcasts more than 120 satellite radio channels, including sport channels dedicated to the Canadian Football League, National Football League, NASCAR and premium soccer and 69 commercial-free music channels. It also has news and comedy channels as well as a channel with shock jock Howard Stern and talk show diva Oprah on the Oprah radio channel.

The company said the number of self-paying subscribers in Canada increased 8.5 per cent to 1.8 million from 1.6 million a year ago. Its overall subscriber base grew to 2.4 million from 2.2 million.

Late Tuesday, Sirius XM Canada Holdings Inc. reported record first-quarter revenue of $76.4 million and a 7.3 per cent increase in quarterly profits.

The revenue increase represented a gain of 11 per cent from $68.9 million in the same quarter a year ago.

Net profit of $3.5 million was up from $3.2 million in the prior-year period but unchanged on a per share bases at three cents per diluted share.